Why a New Auto Policy For Your Young Driver May Be a Bad Idea

February 3, 2015

auto policy

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If you’re a parent here in the New Hartford area, you either are or will have a young driver in your household. As we recall back when we were that age (a long time ago for many of us here at Scalzo, Zogby & Wittig!), getting your drivers license was the most exciting thing about growing up and turning sixteen.

Having a young driver in the household can be a good thing for parents. If your son or daughter is driving, you can send them off to the grocery store before dinner to pick up some last minute items. Or on the weekend, you’ve just run out of paint but young Johnnie is right there to head out to J-K Lumber for another gallon.

Also, teaching your kids to drive can be fun. Yes, it’s harrowing at first, but it draws you closer to your child who, yesterday it seems, was just a little kid. You and your daughter become more like adult partners as you teach her all you know about driving safely to the Sangertown Mall, local soccer field, or even up north to the Adirondacks with the rest of the family.

One of the more difficult issues parents have to deal with, though, is the cost to add their child as a driver to their car insurance policy. As you can imagine, insurance companies rate young drivers with higher premiums than more mature, older drivers. So, adding your son or daughter to your auto policy will cost more.

But when people come to us for quotes, a mistake we do see them making is to place their young drivers on a separate policy in their son’s or daughter’s name. The idea here is to purchase a policy with lower limits of liability for the young driver to save money. On its surface, this makes sense.

BUT, it can actually cost you more. Here’s why…

Most likely your child is a resident of your household and a dependent on your tax returns. That means that he or she is your legal responsibility. If your son is in an accident that is his fault and he is found by the courts to be negligent, his policy will pay for the damages.

The problem is that his lower limits of liability may not be enough to pay for the settlement. If that’s the case, the courts will look to the parent for the balance due the injured party. So your car insurance policy will have to kick in for the balance up to its limits of liability.

The upshot is that you as the parent are on the hook anyways. The money you’ve spent on your son’s separate policy with the lower limits is really wasted if an accident is severe enough. And the likelihood that a young driver will be in a serious accident is exponentially higher than that of an older, more mature driver.

For this reason, we recommend that our insureds add their young drivers to their own policy. This usually costs you less than buying a separate policy with lower limits. And with your child on your policy, you might be more inclined to do everything you can to instill in him/her good driving habits and strictly control where they drive and with who.

There are very few situations that we deal with as insurance agents here in the Utica area that are worse than handling a serious claim where a client’s child is severely injured or worse in a car accident. A drivers license is the first step for your son or daughter on the road to adulthood, we ask all of our clients to do everything they can to be sure they’re safe.

So, send your daughter up to Price Chopper for a vegetable for tonight’s dinner and know that you have the insurance coverage you’ll need to protect both of you.

Until next time,

The SZW Personal Accounts Team.

Scalzo, Zogby & Wittig, Inc. is your New Hartford area independent insurance agent. Call us for a quote on insurance for your home, car, business, or life at 315.792.0000.